Scott Weavil’s Post

📓 Deal Diary | "It's a simple business" 💭 Lately, there's been some really good content around "simple deals" from Pat Linden and others that have focused on that being the client's (initial) perspective about a transaction. 👉 This week, a buy-side client was confronted by a broker who informed him that his $6M listing was a "simple business." This was used to convey that typical terms like a reasonable timeline to closing to allow for financing, standard exclusivity, and seller financing were overkill for the transaction. 🛑 We are big believers in keeping things as simple *as the deal warrants,* but don't be willing to overlook basic transactional building blocks to appease the "simpletons". In this instance, the broker knew what his client would accept and was advocating for that position. He may have also been a bit frustrated that his client's expectations were unrealistic. Absolutely nothing against this broker and his approach here, but you don't have to be the buyer that falls victim to the simple mantra and meets the seller's unrealistic expectations. Sometimes, some time and market seasoning does the trick 🌶

A recent deal study that found 31% of transactions have earnouts, meaning that there is some sort of contingent purchase price that's payable after the closing. 💡 It's complicated, though, and it creates potential risk in the future to the seller. But there are certain instances where it's the only way to get a deal done. 💡 Most often an earnout is in play when there are valuation differences between buyer and seller. 💡 Sometimes a strategic buyer can be competing with a private equity firm that's offering a much greater multiple. An earnout in that situation can be a way to close the gap. But there is risk. 💡 Complicated is an understatement with earnouts. The battleground on the earnout is generally going to be control — post-closing, who gets to control that business unit, and making sure that the seller isn't impeded from hitting the thresholds that allow them to achieve the earnout. 🔶 The strong advice to sellers is.... to get professional advice. Far in advance of entering into a potential deal negotiation. https://lnkd.in/efCEr7hR

Most deals don’t fall apart because of fancy financing hiccups, or because of some deep due diligence discovery. The harsh truth? Sellers have commitment issues. They love the idea of selling until it’s time to actually sign on the dotted line and walk away. When it hits them—whether it’s ego, fear, or regret—they pull the plug. You can have the cleanest deal structure, the best financing package, and a buyer ready to go, but if the seller starts backpedaling, all that effort is toast. Now, here’s the kicker: If you don’t anticipate this, you’ll end up wasting months, maybe years, in a dead-end. Expect it, prepare for it, and don’t fall for ‘I’m ready to sell’ until they’ve signed, sealed, and delivered."

One of the most frustrating things for a founder selling their business: A retrade. Retrading is when a buyer tries to renegotiate the terms of a transaction late in a process due to "new" information that arose during final diligence. When this happens, it's frustrating for founders because they've committed a lot of time working with a buyer, only to have the deal change or fall through altogether. The best way to avoid retrading is to: * Be organized around providing diligence information There are legitimate cases where a buyer discovers something in diligence that creates a space for renegotiation. But if you have an organized process for sharing business data, you'll minimize any surprises cropping up late in the process. Still, there are some financial buyers who are strategic retraders, meaning they regularly use retrades as a way to acquire assets at a better price. To prevent these types of retrades: * Keep the process competitive When a buyer knows you have multiple parties participating in a process and therefore options to choose from, that's a deterrent to a retrade. That means you should stay out of exclusivity as long as possible and keep multiple buyers warm, so that if a buyer tries to retrade, you have options other than just walking away from a deal. #founders #pathtoexit

Most deals don’t fall apart because of fancy financing hiccups, or because of some deep due diligence discovery. The harsh truth? Sellers have commitment issues. They love the idea of selling until it’s time to actually sign on the dotted line and walk away. When it hits them—whether it’s ego, fear, or regret—they pull the plug. You can have the cleanest deal structure, the best financing package, and a buyer ready to go, but if the seller starts backpedaling, all that effort is toast. Now, here’s the kicker: If you don’t anticipate this, you’ll end up wasting months, maybe years, in a dead-end. Expect it, prepare for it, and don’t fall for ‘I’m ready to sell’ until they’ve signed, sealed, and delivered."

I believe in creating deals so that both sides get what they want. That doesn't mean that all transactions have to be equal. Every transaction is unique, and different businesses and people not only value consideration differently but also bring different value to the transaction. While some might believe that it isn't fair to make two different offers to two similar sellers, if the seller is happy with the deal they struck, that is a successful transaction for the seller.

In Feb we closed a deal with an earn out For those who do not know, this is a deal component where the buyer pays some $$ after a sale when a business hits certain sales or profit targets The earn out on this deal was the largest % earn out we've ever had two parties agree to as a component of a deal 25 - 30% of total deal size The seller worked hard to help the buyer get their head around the business. We were impressed with the buyer and her ability to execute We are now 4 months past the close. The earn out payments are above all expectations, and have been every month Sometimes things work out great for all ☀ Getting deals done requires flexibility and creative deal structuring. We will help you navigate and consider a variety of levers with YOUR deal ✔

Level 3.0 deal making: Off-market sourced 40-year old enduringly profitable business, a seller who believes it's worth $6 million, negotiated down to $3 million, with real estate, all seller financing, with note forgiveness to account for customer concentration.

Dennette's Commerical Corner features: 𝐀 𝐑𝐈𝐒𝐄 𝐈𝐍 𝐒𝐄𝐋𝐋𝐄𝐑 𝐅𝐈𝐍𝐀𝐍𝐂𝐈𝐍𝐆 𝐈𝐍 𝐂𝐎𝐌𝐌𝐄𝐑𝐂𝐈𝐀𝐋 𝐄𝐒𝐂𝐑𝐎𝐖 𝐂𝐋𝐎𝐒𝐈𝐍𝐆𝐒? Seller Financing is on the Rise! 💰💼🤝 In recent closings, our savvy Sellers have carried notes worth $650,000. If these notes are held to term, they stand to rake in an impressive $215,000.00 in interest payments! 📊📈Why Seller Financing? Sellers are flexing their creative muscles, and this trend is gaining momentum in our Commercial closings. 🗣️📞Navigating the Intricacies? We’re seasoned experts at handling these transactions. Let’s chat about how Seller Financing can work for you! #TicorTitleSpokane #CommercialRealEstate #SellerFinancing #TicorTitleCommercial #TicorTitleSpokane #realtors #commercial #titlecompany #commercialloans #commercialproperty #spokanerealestate